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A Monopolist Sells in Two Markets

Question 3

Multiple Choice

A monopolist sells in two markets. The demand curve for her product is given by p1 = 122 - 2x1 in the first market and p2 = 306 - 5x2 in the second market, where xi is the quantity sold in market i and pi is the price charged in market i. She has a constant marginal cost of production, c = 6, and no fixed costs. She can charge different prices in the two markets. What is the profit-maximizing combination of quantities for this monopolist?


A) x1 = 58 and x2 = 32.
B) x1 = 29 and x2 = 30.
C) x1 = 59 and x2 = 29.
D) x1 = 39 and x2 = 28.
E) x1 = 49 and x2 = 40.

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